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Summerset completes $600m loan facility

NZN 31/03/2017 Rebecca Howard

Summerset Group expands funding lines with a new $600 million syndicated loan facility refinance to pay for development projects in existing and future retirement villages as a housing boom continues and an ageing population grows.

The facility is an increase from $450m syndicated loan facility that was previously in place.

According to Summerset, it currently has $283m of debt, or 47 per cent of the $600m, "leaving substantive headroom for future development or unexpected economic cycle events."

New Zealand retirement village operators are acquiring land and preparing for a record building spree in anticipation of increased demand as people born in the country's post-war era reach the target age for operators.

The village owners do not buy and sell the units but sell the right to occupy. When a resident vacates the unit they receive their original investment back less a management fee.

The owner can then resell the unit for the current market value, effectively receiving all of the capital gain and the management fee.

Chief executive Julian Cook said Summerset continues to receive strong support from financial institutions.

"We adopt a prudent approach to debt levels and having conservative levels of headroom puts us in good shape for continued development, and also in the event of a property downturn," he said.

The loan facility syndicate comprises ANZ Bank New Zealand, Bank of New Zealand and ASB Bank and the syndicated loan facility comprises tranches which are a mix of 3.4 and five years, with 37.5 per cent maturing in August 2020 and 62.5 per cent maturing in March 2022.

The facility is intended to be used for funding development projects.

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